```

[Federal Register Volume 71, Number 186 (Tuesday, September 26, 2006)]
[Rules and Regulations]
[Pages 56001-56005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8258]

[[Page 56001]]

=======================================================================
-----------------------------------------------------------------------

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 745

RIN 3133-AD18

Share Insurance and Appendix

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: NCUA is amending its share insurance rules to implement 
amendments to the Federal Credit Union Act (FCU Act) made by the 
Federal Deposit Insurance Reform Act of 2005 (Reform Act) and the 
Federal Deposit Insurance Reform Conforming Amendments Act of 2005 
(Conforming Amendments Act). In this regard, the final rule: Defines 
the ``standard maximum share insurance amount'' as $100,000 and 
provides that beginning in 2010, and in each subsequent 5-year period 
thereafter, NCUA and the Federal Deposit Insurance Corporation (FDIC) 
will jointly consider if an inflation adjustment is appropriate to 
increase that amount; increases the share insurance limit for certain 
retirement accounts from $100,000 to $250,000, subject to the above 
inflation adjustments; and provides pass-through coverage to each 
participant of an employee benefit plan, but limits the acceptance of 
shares in employee benefit plans to insured credit unions that are well 
capitalized or adequately capitalized. Additionally, NCUA is amending 
its share insurance rules to clarify insurance coverage for qualified 
tuition savings programs, commonly referred to as 529 plans, and share 
accounts denominated in foreign currencies.

DATES: This final rule is effective October 26, 2006.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Staff Attorney, Office 
of General Counsel, or Moisette Green, Staff Attorney, Office of 
General Counsel, at the above address or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

A. Federal Deposit Insurance Reform Act of 2005 and Federal Deposit 
Insurance Reform Conforming Amendments Act of 2005

    The Reform Act and Conforming Amendments Act, (Pub. L. 109-171) and 
(Pub. L. 109-173), amended the share insurance provisions of the FCU 
Act in a number of ways. 12 U.S.C. 1781-1790d. Specifically, section 
2103(a) of the Reform Act provides that beginning April 1, 2010, and 
each subsequent 5-year period thereafter, NCUA and the FDIC will 
jointly consider if an inflation adjustment is appropriate to increase 
the NCUA's current ``standard maximum share insurance amount'' (SMSIA), 
which is defined in 12 U.S.C. 1787(k) as $100,000, and the ``standard 
maximum deposit insurance amount'' (SMDIA), the FDIC equivalent. Any 
increase to the SMSIA or SMDIA will be calculated using a formula 
comparing, over time, the published annual values of the Personal 
Consumption Expenditures Chain-Type Price Index, published by the 
Department of Commerce, and rounded down to the nearest $10,000. The 
Reform Act also requires NCUA and FDIC to consider certain other 
factors in determining whether to increase the SMSIA and SMDIA. 
Additionally, if an adjustment is warranted, NCUA and FDIC are required 
to publish information in the Federal Register and provide a 
corresponding report to Congress by April 5, 2010, and every succeeding 
fifth year. Subsequently, under those circumstances, an inflation 
adjustment will take effect on January 1st of the year immediately 
succeeding the year in which the adjustment is calculated unless an act 
of Congress provides otherwise.
    Section 2(d)(1)(C) of the Conforming Amendments Act mandates that 
NCUA provide ``pass-through'' share insurance coverage for shares in 
any employee benefit plan account on a per-participant basis. This type 
of coverage is called ``pass-through'' because it passes through the 
employee benefit plan administrator to each of the participants in the 
plan. The employee benefit plans to which this section refers include 
those described in: (1) Section 3(3) of the Employee Retirement Income 
Security Act of 1974; (2) section 401(d) of the Internal Revenue Code 
(IRC); and (3) section 457 of the IRC. This section, however, limits 
the acceptance of employee benefit plan shares to insured credit unions 
that are ``well capitalized'' or ``adequately capitalized'' as those 
terms are defined in section 216(c) of the FCU Act. 12 U.S.C. 1790d(c).
    Section 2(d)(2) of the Conforming Amendments Act amended 12 U.S.C. 
1787(k)(3) of the FCU Act to increase the share insurance limit for 
certain retirement accounts from $100,000 to $250,000. The increased 
limit is also subject to the inflation adjustments discussed above. The 
types of accounts within this category of coverage include those 
specifically enumerated in 12 U.S.C. 1787(k)(3): Individual retirement 
accounts (IRAs) described in section 408(a) of the IRC and any plan 
described in section 401(d) of the IRC (Keogh accounts).
    Additionally, the Conforming Amendments Act created the term 
``government depositor'' in connection with public funds described in 
and insured under 12 U.S.C. 1787(k)(2). It also provides that the 
shares of a government depositor are insured in an amount up to the 
SMSIA. The amendments to NCUA's share insurance rules in part 745 
implement the share insurance coverage revisions made by the Reform Act 
and the Conforming Amendments Act.

B. Interim Final Rule

    In March 2006, the NCUA Board issued an interim final rule with 
request for comments to implement the statutory amendments summarized 
above. 71 FR 14631 (March 23, 2006). It put in place share insurance 
rules, effective on April 1, 2006, that enhance share insurance 
coverage, clarify legal positions already taken by NCUA, maintain 
parity with the FDIC, and are consistent with the regulatory changes 
FDIC made under the Reform Act and Conforming Amendments Act. 
Additionally, the interim final rule clarified and incorporated prior 
interpretations of the share insurance rules that provide coverage for 
qualified tuition savings plans created pursuant to section 529 of the 
IRC (529 plans) and share accounts denominated in foreign currencies.

C. Summary of Comments

    NCUA received 14 comments regarding the interim rule: Three from 
FCUs, six from state credit unions, two from credit union trade 
associations, and three from a professional association of state and 
territorial regulatory agencies. All 14 commenters supported the rule.
    Two commenters, while supporting the rule in general, limited their 
comments to NCUA's clarification of share insurance coverage for shares 
denominated in foreign currency. One of those commenters also requested 
NCUA permit credit unions to invest foreign currencies received from 
members at pre-approved corporate credit unions. Permissible 
investments for FCUs are beyond the scope of this rulemaking, but the 
Board may consider this authority in other rulemakings.
    The other twelve commenters supporting the rule responded to NCUA's 
request for comments on whether pass-through coverage for employee 
benefit plans should depend on the participants' membership in the 
credit union where the employee benefit plan is maintained. All agreed 
share

[[Page 56002]]

insurance coverage should be extended to all participants of the 
employee benefit plan regardless of the participants' membership in the 
credit union. Many of the commenters noted that: (1) Employers 
generally establish employee benefit plans at credit unions where there 
is already some membership connection; (2) participants may not control 
where their interests in the employee benefit plan are deposited; and, 
(3) the Conforming Amendments Act prohibits credit unions that are not 
well or adequately capitalized from accepting employee benefit plan 
shares.
    Seven commenters requested NCUA extend pass-through coverage to 
attorney trust accounts commonly known as IOLTA accounts (interest-on-
lawyer-trust accounts) in a fashion similar to employee benefit plans 
accounts. These comments are beyond the scope of this rulemaking. The 
Conforming Amendments Act does not address IOLTA accounts, and NCUA 
will continue to insure IOLTA accounts by providing pass-through 
coverage only to members.

D. Standard Maximum Share Insurance Amount

    The interim final rule added a definition of SMSIA to Sec.  745.1, 
the definitions section of the share insurance rules. 12 CFR 745.1. The 
definition of SMSIA tracks the language of the Conforming Amendments 
Act and reads ``$100,000, adjusted as provided under section 
11(a)(1)(F) of the Federal Deposit Insurance Act.'' 12 U.S.C. 1821 
(a)(1)(F). Revised section 11(a)(1)(F) of the Federal Deposit Insurance 
Act details how every five years, the NCUA and FDIC will consider and 
calculate the inflation adjustment to the SMSIA and SMDIA, as discussed 
above. Also, the definition of SMSIA notes: (1) The current SMSIA is 
$100,000; (2) the acronym SMSIA is used throughout the regulatory text 
of part 745; and (3) all examples of share insurance coverage in part 
745 use the current SMSIA of $100,000, unless a higher limit is 
presented and specifically noted. Accordingly, all references to the 
current insurance amount of $100,000 in the appendix to part 745, 
except for the examples in the appendix, are replaced by the acronym 
SMSIA. Examples in the appendix to part 745, which NCUA believes are 
helpful in illustrating a member's insurance coverage, will continue to 
provide the dollar amount of insurance for the particular example so 
members can calculate and know the insurance available on their 
accounts. The use of the acronym SMSIA throughout the regulatory text 
of part 745, instead of an actual number, will allow NCUA to avoid 
having to change the numerical limit of share insurance throughout the 
rule each time the SMSIA is adjusted for inflation.
    The amendments regarding the SMSIA in the interim final rule are 
adopted in this final rule without change.

E. Retirement and Other Employee Benefit Plan Accounts

    In implementing amendments to the FCU Act by the Conforming 
Amendments Act, the interim final rule consolidated Sec.  745.9-3 into 
Sec.  745.9-2. This section now addresses share insurance coverage for 
IRA/Keogh accounts and deferred compensation accounts, establishes 
pass-through insurance coverage for employee benefit plan accounts, and 
increases share insurance coverage to $250,000 for certain retirement 
accounts.
    Although the Conforming Amendments Act prohibits insured credit 
unions that are not ``well capitalized'' or ``adequately capitalized'' 
from accepting employee benefit plan shares, pass-through coverage is 
granted for shares in employee benefit plan accounts in existence 
before this rule even if the credit unions do not meet the requisite 
capital levels. Credit unions that do not meet the requisite capital 
levels, or those that previously met the requisite capital levels but 
fall below those levels, are prohibited from accepting shares in 
employee benefit plan accounts until their capital levels improve.
    Previously, full share insurance coverage in an employee benefit 
plan, such as a deferred compensation account, had been limited to plan 
participants who are also members of the credit union in which the 
account is maintained. In the interim final rule, NCUA noted that, 
during the rulemaking process, it intended to continue to insure 
employee benefit plan participants in accordance with the example for 
retirement funds then provided in the appendix to NCUA's insurance 
rule. 12 CFR part 745, Appendix, Paragraph G, Examples 3(a) and 3(b). 
That meant participants in an employee benefit plan who are credit 
union members would receive up to $100,000 as to their determinable 
interest but member interests not capable of evaluation and nonmember 
interests would be added together and insured up to $100,000 in the 
aggregate.
    NCUA also noted in the interim final that the language of the 
Conforming Amendments Act suggests greater NCUA authority to provide 
pass-through coverage on a per-participant basis, regardless of 
membership status. Specifically, the Conforming Amendments Act defines 
pass-through insurance as ``insurance coverage based on the interest of 
each participant'' without including any limitations or qualifications 
requiring the membership status of each participant. Federal Deposit 
Insurance Reform Conforming Amendments Act of 2005, Public Law 109-173. 
Also, the legislative history of the Reform Act evidences congressional 
intent to advance as a national priority the enhancement of retirement 
security for all Americans. H.R. Rep. No. 109-67 at 22 (2005).
    On those bases, and in consideration of the comments received, NCUA 
believes it is appropriate to extend full coverage to all participants 
in an employee benefit plan. NCUA does not believe it is necessary to 
restrict this extended coverage only to plans where the plan trustee or 
the employer sponsoring the plan is a member or if some percentage of 
plan participants are members. NCUA finds the language of the 
Conforming Amendments Act does not impose any membership restrictions 
and supports the agency's position.
    Furthermore, NCUA believes extending full coverage to all 
participants, regardless of membership status, is both fair and 
reasonable for two additional reasons. First, it is extremely likely 
that employers or trustees will only establish employee benefit plans 
at a credit union if there is already some membership connection, for 
example, the employee group is within the field of membership of the 
credit union. Second, participants may not be able to control or 
readily determine where their interests in an employee benefit plan are 
maintained. Therefore, as a matter of fairness to participants, all 
should be assured of full, pass-through coverage. As discussed above, 
NCUA will extend full pass-through coverage to member and nonmember 
participants alike. Accordingly, examples 3(a) and (b) in paragraph G 
of the appendix are revised to illustrate the pass-through coverage 
provided to employee benefit plans.

F. Public Unit Accounts

    The interim final rule changed the heading of Sec.  745.10 from 
``Public Unit Accounts'' to ``Accounts Held By Government Depositors'' 
to reflect the amendments to 12 U.S.C. 1787(k)(2) by the Conforming 
Amendments Act. The interim rule did not make any substantive changes 
to Sec.  745.10 other than replacing references to $100,000 with 
references to the SMSIA. The amendments regarding public unit

[[Page 56003]]

accounts in the interim rule are adopted in this final rule without 
change.

G. 529 Programs

    Section 529 of the IRC provides tax benefits for 529 plans. 26 
U.S.C. 529(a). These programs include prepaid tuition programs, which 
educational institutions may create, as well as tuition savings 
programs that states or public instrumentalities sponsor. 26 U.S.C. 
529(b)(1). Section 529 defines a tuition savings program as a program 
under which a person ``may make contributions to an account which is 
established for the purpose of meeting the qualified higher education 
expenses of the designated beneficiary of the account'' and which meets 
certain requirements. 26 U.S.C. 529(b)(1)(A)(ii). A participant in a 
529 program acquires an interest in a state trust and does not directly 
deposit funds with a financial institution.
    In April 2005, a state contacted NCUA about share insurance 
coverage for its 529 plan. The state asked NCUA to adopt a rule similar 
to the FDIC's interim final rule to allow pass-through coverage for 
participants in the 529 program. 70 FR 33689 (June 9, 2005). The FDIC's 
interim final rule provided pass-through coverage to each participant 
aggregated with the participant's other single ownership accounts at 
the same financial institution up to $100,000, provided that each 
deposit may be traced to one or more particular investors and the 
FDIC's disclosure rules for pass-through coverage had been satisfied. 
70 FR at 33691.
    NCUA's Office of General Counsel (OGC) issued a legal opinion 
concluding that NCUA's insurance rules provide pass-through coverage to 
a 529 program participant if the participant is a member of the 
federally insured credit union where the 529 program account is 
maintained and if the account is properly titled. OGC Legal Opinion 05-
0630 (July 1, 2005). This interpretation of the NCUA rule reached the 
same result in terms of coverage and maintained parity with the deposit 
insurance provided by the FDIC in its interim rule, although on a 
slightly different basis. The legal opinion also noted that NCUA would 
consider amending its insurance rule when FDIC issued a final one. Id. 
In October 2005, FDIC issued a final rule without any substantive 
changes. The interim rule incorporated OGC Legal Opinion 05-0630 into 
part 745 to clarify that share insurance coverage is available for 529 
program participants.
    In 529 programs of which NCUA is aware, the state holds 529 program 
funds as an agent for the participants. Accordingly, these accounts are 
insured as single ownership accounts under NCUA's share insurance rule 
covering accounts held by agents or nominees. 12 CFR 745.3(a)(2).
    Agent or nominee accounts are insured as individual accounts and 
are aggregated with all other individual accounts a participant has at 
the same credit union up to the SMSIA. To be fully insured, the 
participant's interest must be ascertainable from the credit union's or 
state's records. 12 CFR 745.2(c)(2). Therefore, careful titling of the 
accounts and proper records are necessary to ensure each participant 
receives individual account coverage. NCUA insurance regulations 
require a participant to be a member of the credit union or otherwise 
eligible to maintain an insured account in the credit union. 12 CFR 
745.0. The amendments regarding 529 programs in the interim rule are 
adopted in this final rule without change.

H. Share Accounts Denominated in a Foreign Currency

    The FCU Act authorizes the NCUA Board to limit the type of share 
payments a credit union may accept and to determine the types of funds 
that will be insured. 12 U.S.C. 1766, 1782, 1782(h)(3). If NCUA permits 
federal credit unions (FCUs) to accept member accounts denominated in a 
foreign currency, then NCUA must insure them. 12 U.S.C. 1781(a). Under 
the FCU Act's nondiscrimination provision, NCUA must provide the same 
coverage for member accounts of state-chartered credit unions that 
comply with the FCU Act and NCUA regulations. Id.; 12 U.S.C. 1790.
    Under the incidental powers rule, FCUs can provide monetary 
instrument services that enable members to purchase, sell, or exchange 
various currencies. 12 CFR 721.3(i). FCUs can use their accounts in 
foreign financial institutions to facilitate transfer and negotiation 
of member share drafts denominated in foreign currencies or engage in 
monetary transfer services. FCU funds deposited in a foreign financial 
institution are not insured by NCUA and may not be insured by the 
foreign country. Consequently, NCUA has highlighted the need for FCUs 
to exercise due diligence to ensure the foreign financial institutions 
with which it has accounts are financially sound, suitably regulated, 
and authorized to accept its transactions before opening any accounts. 
OGC Legal Opinion 99-1031 (December 9, 1999). FCUs assume the risk of 
currency fluctuations when they maintain an account in a foreign 
financial institution. NCUA recognized this risk and, before adopting 
Sec.  721.3(i), had recommended FCUs either purchase or deposit only 
the amount of foreign currency needed to satisfy immediate short-term 
needs of their members. OGC Legal Opinions 99-1031 (December 9, 1999); 
90-0637 (June 29, 1990).
    While the FCU Act does not prohibit FCUs from accepting foreign-
denominated shares, potential safety and soundness concerns associated 
with currency fluctuations have kept FCUs from offering these accounts. 
Accordingly, NCUA has only permitted FCUs to provide foreign currency 
services as an incidental powers activity rather than allowing FCUs to 
maintain shares in foreign currency. See OGC Legal Opinions 89-0822 
(September 15, 1989); 89-0613 (July 31, 1989). Simply accepting shares 
denominated in a foreign currency presents little risk, if any, to 
credit unions. NCUA believes federally insured credit unions can 
effectively manage the risks associated with accepting shares 
denominated in foreign currency and issued provisions similar to the 
FDIC's in the interim final rule. Lending or investing funds in foreign 
currency still presents an increased risk to credit unions due to 
currency fluctuations that cannot be easily ameliorated, so the interim 
final rule did not permit lending or investing funds denominated in a 
foreign currency.
    Previously, NCUA had not expressly addressed the insurability of 
member accounts denominated in foreign currency except in the foreign 
branching regulation, where NCUA has limited the insurability of member 
accounts at foreign branches of an insured credit union to accounts 
denominated in U.S. dollars. 12 CFR 741.11(e). The interim final rule 
provided share insurance coverage for shares denominated in a foreign 
currency and for conversion of foreign currency to U.S. dollars before 
an insurance payout in the event a credit union is liquidated similarly 
to the FDIC.
    The FDIC provides insurance coverage for deposits at insured banks 
denominated in a foreign currency equal to the amount of U.S. dollars 
equivalent in value to the amount of the deposit denominated in the 
foreign currency up to the SMDIA. 12 CFR 330.3(c). Under the FDIC rule, 
if an insured bank is liquidated, the value of the foreign currency 
deposit is determined using the rate of exchange quoted by the Federal 
Reserve Bank of New York at noon on the day the bank defaults, unless 
the deposit agreement states otherwise. Id. Deposits payable solely

[[Page 56004]]

outside of the U.S. and its territories are not insurable deposits. 12 
CFR 330.3(e).
    As noted above, accepting shares denominated in a foreign currency 
presents little risk. If a credit union is able to fund an operation 
that is fully integrated and supportable in foreign currency, it will 
have minimized its exposure to risk of loss due to currency 
fluctuation. Actually, the risk would shift to the members who deposit 
and withdraw funds denominated in the foreign currency.
    The interim final rule permitted credit unions to accept shares 
denominated in foreign currency and provided share insurance coverage 
of those shares. By accepting shares denominated in foreign currencies, 
credit unions can better serve members who, for example, receive 
payments in foreign currencies. Additionally, members who deposit 
shares denominated in a foreign currency will have the same share 
insurance coverage available for share accounts denominated in U.S. 
dollars. Credit unions must carefully consider any risk associated with 
maintaining shares denominated in foreign currencies before offering 
this service to their members. Federally insured credit unions that 
maintain shares denominated in a foreign currency will receive 
instructions on how to report these deposits on 5300 call reports.
    The interim final did not permit insured credit unions to make 
loans or invest funds denominated in foreign currencies. These 
transactions may require credit unions to participate in trading 
currency, also called hedging or currency swaps, to manage the risk of 
potential loss due to currency fluctuations. While hedging may help 
credit unions protect against risks associated with changing currency 
rates, NCUA rules currently prohibit natural person FCUs from investing 
in derivatives like currency swaps. 12 CFR 703.16(a). FCUs that wish to 
engage in swaps to hedge against currency fluctuation must apply for 
NCUA approval as a part of a properly designed investment pilot 
program. 12 CFR 703.19. This rulemaking only addresses share insurance 
coverage. During NCUA's annual regulatory review, staff will consider 
the investments rules in part 703 and may recommend amendments to FCU 
investment authority. The amendments regarding share accounts 
denominated in a foreign currency in the interim final rule are adopted 
in this final rule without change.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a rule may have on a 
substantial number of small credit unions, defined as those under ten 
million dollars in assets. This final rule clarifies and improves 
available share insurance coverage, without imposing any regulatory 
burden. The final amendments would not have a significant economic 
impact on a substantial number of small credit unions, and, therefore, 
a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    NCUA has determined that this final rule would not increase 
paperwork requirements under the Paperwork Reduction Act of 1995 and 
regulations of the Office of Management and Budget.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. This final rule would not have substantial 
direct effects on the states, on the connection between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this final rule would not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 
2681 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 104-121) (SBREFA) provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the 
Administrative Procedure Act. 5 U.S.C. 551. The Office of Management 
and Budget has determined that this final rule is not a major rule for 
purposes of SBREFA.

List of Subjects in 12 CFR Part 745

    Credit unions, Share insurance.

    By the National Credit Union Administration Board on September 
21, 2006.
Mary F. Rupp,
Secretary of the Board.

0
Accordingly, NCUA adopts the interim rule amending 12 CFR part 745, 
which was published at 71 FR 14631 on March 23, 2006, as a final rule 
with the following change:

PART 745--SHARE INSURANCE AND APPENDIX

0
1. The authority citation for part 745 continues to read as follows:

    Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 
1787, 1789.

0
2. The Appendix to part 745 is amended by revising Examples 3(a) and 
3(b) of Paragraph G to read as follows:

Appendix to Part 745--Examples of Insurance Coverage Afforded Accounts 
in Credit Unions Insured by the National Credit Union Share Insurance 
Fund

* * * * *

G. How Are Trust Accounts and Retirement Accounts Insured?

* * * * *
    Example 3(a) Question: Member T invests $500,000 in trust for 
ABC Employees Retirement Fund. Some of the participants are members 
and some are not. What is the insurance coverage?
    Answer: The account is insured as to the determinable interests 
of each participant to a maximum of $100,000 per participant 
regardless of credit union member status. T's member status is also 
irrelevant. Participant interests not capable of evaluation shall be 
added together and insured to a maximum of $100,000 in the aggregate 
(Sec.  745.9-2).

    Example 3(b) Question: T is trustee for the ABC Employees 
Retirement Fund containing $1,000,000. Fund participant A has a 
determinable interest of $90,000 in the Fund (9% of the total). T 
invests $500,000 of the Fund in an insured credit union and the 
remaining $500,000 elsewhere. Some of the participants of the Fund 
are members of the credit union and some are not. T does not 
segregate each participant's interest in the Fund. What is the 
insurance coverage?
    Answer: The account is insured as to the determinable interest 
of each participant, adjusted in proportion to the Fund's investment 
in the credit union, regardless of the membership status of the 
participants or trustee. A's insured interest in the account is 
$45,000, or 9% of $500,000. This reflects the fact that only 50% of 
the Fund is in the

[[Page 56005]]

account and A's interest in the account is in the same proportion as 
his interest in the overall plan. All other participants would be 
similarly insured. Participants' interests not capable of evaluation 
are added together and insured to a maximum of $100,000 in the 
aggregate (Sec.  745.9-2).
* * * * *
[FR Doc. 06-8258 Filed 9-25-06; 8:45 am]
BILLING CODE 7535-01-P
```